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OPEC favorable supply shock
01-26-2010, 09:19 PM,
#1
OPEC favorable supply shock
“The most disruptive supply shocks in recent history were caused by OPEC, the Organization of Petroleum Exporting Countries. In the early 1970s, OPEC’s coordinated reduction in the supply of oil nearly doubled the world price. This increase in oil prices caused stagflation in most industrial countries.”

The above scenario shows the case of adverse supply shock in oil market. In which condition there will be a favorable supply shock in oil market? What will be the impact of this shock?


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